FM Capital Partners wins Libyan SWF fraud case against former CEO

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LONDON (Reuters) - FM Capital Partners (FMCP), which manages money for sovereign wealth fund the Libya Africa Investment Portfolio (LAP), has won a London court case against its former chief executive officer (CEO) over allegations of fraud and corruption.

As a result, FMCP may be able to recover about $20-$25 million, according to a statement issued by an FMCP spokesperson on Wednesday.

LAP is a subsidiary of the Libyan Investment Authority (LIA), which has some $67 billion in assets and has brought several court cases against former investment managers. LAP was established in February 2006 and has about $5 billion under management with holdings in a number of African companies.

FMCP is a London-based alternative asset manager, which invested and managed some $550 million on behalf of LAP.

In the case, heard in London’s Commercial Court in March 2018, FMCP alleged that between 2009 and 2014, its former CEO Frederic Marino and former Julius Baer banker Yoshiki Ohmura - a counterparty - funneled money away from FMCP and LAP through private offshore companies to fund lavish lifestyles.

In 2014, after Marino was suspended, FMCP’s board of directors began an investigation and reported the matter to the National Crime Agency (NCA) and the Financial Conduct Authority, the statement said.

Marino was subsequently dismissed on grounds of gross misconduct, and FMCP issued legal proceedings against him. Around the same time, the NCA began a criminal investigation into Marino and Ohmura’s conduct, which is still ongoing, the statement said.

The judgment, handed down on Wednesday by Mrs Justice Sara Cockerill and seen by Reuters, found that during the period 2009-2014, Marino and Ohmura dishonestly funneled money away from FMCP and LAP.

“As a matter of English law: Mr Marino is liable in breach of fiduciary duty, dishonest assistance and bribery in respect of all the heads advanced against him,” Judge Cockerill said.

She also found Ohmura liable in dishonest assistance and bribery in English law, stating that she was unable to accept “significant portions” of his evidence.

A lawyer for Marino said the former FMCP CEO was “extremely disappointed” by the outcome, and was “considering with his legal team the steps he should now take to vindicate his position”.

Lawyers for Ohmura did not immediately respond to a request for comment.

The court will meet again in late July to decide how much FMCP can recover from the defendants, according to FMCP’s spokesperson.

The case is the latest in a string of litigation involving Libyan sovereign funds. In 2016 the LIA lost its legal battle against Goldman Sachs after a seven-week trial relating to nine equity derivatives trades.

But in May 2017 Societe Generale agreed to pay the LIA nearly 1 billion euros ($1.2 billion) to settle a long-running dispute.